The 66 million Americans who depend on Social Security know all about the blizzard of conditions, options and difficult choices that beneficiaries have to navigate when trying to get the most out of their benefits.
“With so many different rules and regulations, it’s no wonder that many people are unclear about how Social Security works,” said Max Benz, co-founder of remote-job.net. “However, understanding the ins and outs of this complex program is essential for ensuring that you receive the maximum benefits to which you’re entitled.”
Here’s a look at some facts that experts say people need to know about the program, but often don’t.
You Don’t Actually Have To Retire
The vast majority of Americans who receive Social Security distributions collect retirement benefits — but not all of them are retired in the traditional sense.
“You can continue working and earning a paycheck while simultaneously receiving Social Security benefits,” said Benz.
In 2023, you can earn up to $21,240 before the SSA deducts $1 from your distributions for every $2 you earn, but only if you claim benefits early. There’s never an income limit once you reach full retirement age. If you reach full retirement this year, you can earn up to $56,520. After that, the SSA will withhold $1 for every $3 you make.
In Fact, You Don’t Even Have To Reach Retirement Age
The age of retirement was traditionally 65, but Congress raised it to 66 for older Americans and 67 for people born in 1960 and later. But you don’t have to wait until you’re 67 or even 65.
“You can claim benefits as early as age 62,” said Benz.
Beware, however, that the SSA presumes you’ll collect benefits for more years, so it reduces your payments for every month you file before your full retirement age. If you claim when you turn 62, you’ll collect only 70% of your full benefits, 75% at 63, 80% at 64, 86.7% at 65 and 93.3% at 66.
On the other hand, if you wait to claim your benefits, you’ll earn delayed retirement credits. The SSA will increase your distributions by a certain percentage for each month you delay until you turn 70, when benefit increases stop.
35 Is a Magic Number
The SSA bases your retirement benefits on your 35 highest-earning years.
“You should work for 35 years or more and pay into the system,” said Ana Codallo, CTO of the health care industry platform Key Opinion Leaders. “If you do not work for 35 years, zeroes will be added to your calculation. Monthly payments are increased when working for those years, no matter how much you are making or what you are doing.”
Survivors Will Thank You for Holding out Until 70
Recipients aren’t the only ones who benefit by accumulating as many delayed retirement credits as possible. Widows and widowers who have reached full retirement age can collect their deceased spouse’s full benefit — including delayed retirement credits — if their spouse waited until age 70 to file.
“Delaying your Social Security payout could provide financial security for your spouse if the unthinkable happens,” said Stephan Baldwin, a senior care expert and founder of Assisted Living Center. “Social Security isn’t the same as life insurance, but your benefits can provide a cushion for your partner if you pass away soon after retiring.”
Claiming Doesn’t Preclude You From Collecting SSI or Other Benefits
Many people believe that claiming Social Security disqualifies them from collecting Supplemental Security Income (SSI), which serves the most vulnerable low-income individuals with disabilities. This simply is not true.
“This program differs from regular Social Security benefits in that it protects those most in need of financial assistance by providing them with additional payments to supplement regular Social Security,” said Natalia Morozova, managing partner at the New York City law firm Cohen, Tucker & Ades P.C.
Also, contrary to common mythology, you’re not forbidden from collecting SNAP or other federal assistance benefits if you collect Social Security, provided your payments don’t put you over the program’s income limits.
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